Management Information Systems

Chapter 3
Enterprise Information Systems

Prof. Tagelsir Mohamed

tagelsir@hotmail.com
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Types of Business information systems
• A typical business organization will have systems
supporting processes for each of the major
business functions.
• Functional systems that operated independently
of each other are cannot easily share information
to support cross-functional business processes.
• They are being replaced with large-scale cross-
functional systems that integrate the activities of
related business processes and organizational
units.
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Types of Business information systems
• A typical firm will also have different systems
supporting the decision-making needs of each
of the main management groups described
earlier.
• Operational management, middle
management, and senior management each
use a specific type of system to support the
decisions they must make to run the company.

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 1. Systems for management decision
making
• Transaction Processing Systems:
• They keep track of the elementary activities
and transactions of the organization, such as
sales, receipts, cash deposits, payroll, credit
decisions, and the flow of materials in a
factory.

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 Transaction processing systems
• The principal purpose of systems at this level
is to answer routine questions and to track the
flow of transactions through the organization.
How many parts are in inventory? What
happened to Mr. X’s payment?
• To answer these kinds of questions,
information generally must be easily available,
current, and accurate.

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 Payroll TPS

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 Transaction processing systems
• A payroll system keeps track of money paid to
employees.
• An employee time sheet with the employee’s
name, social security number, and number of
hours worked per week represents a single
transaction for this system.
• Once this transaction is input into the system, it
updates the system’s file
• The data in the system are combined in different
ways to create reports.
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 Transaction processing systems
• Managers need TPS to monitor the status of
internal operations and the firm’s relations
with the external environment.
• TPS are also major producers of information
for the other systems and business functions.

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 Management Information Systems
• Systems designates a specific category of
information systems serving middle
management.
• MIS provide middle managers with reports on
the organization’s current performance.
• This information is used to monitor and
control the business and predict future
performance.

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 Management Information Systems
• MIS summarize and report on the company’s
basic operations using data supplied by
transaction processing systems.
• MIS typically provide answers to routine
questions that have been specified in advance
and have a predefined procedure for
answering them.

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 MIS getting data from TPS

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 Decision Support Systems
• They support more non-routine decision
making.
• They focus on problems that are unique and
rapidly changing, for which the procedure for
arriving at a solution may not be fully
predefined in advance.

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 Decision Support Systems
• What would be the impact on production
schedules if we were to double sales in the
month of December?
• What would happen to our return on
investment if a factory schedule were delayed
for six months?

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 Decision Support Systems
• Although DSS use internal information from
TPS and MIS, they often bring in information
from external sources, such as current stock
prices or product prices of competitors.
• These systems are employed by “super-user”
managers and business analysts who want to
use sophisticated analytics and models to
analyze data.

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 Voyage-Estimating Decision-Support
System

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 Other business intelligence systems
• Other business intelligence systems are more
data-driven, focusing instead on extracting
useful information from massive quantities of
data.
• They collect and store large amounts of
customer data from its Web site, call center,
lodging reservations, ski schools, and ski
equipment rental stores.

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 Other business intelligence systems
• Custom software is used to analyze these data
to determine the value, revenue potential,
and loyalty of each customer so managers can
make better decisions on how to target their
marketing programs.

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 Executive support systems
• They help senior management make these
decisions.
• They address non-routine decisions requiring
judgment, evaluation, and insight because
there is no agreed-on procedure for arriving at
a solution.
• ESS present graphs and data from many
sources through an interface that is easy for
senior managers to use.

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 Executive support systems
• Often the information is delivered to senior
executives through a portal, which uses a
Web interface to present integrated
personalized business content.
• ESS are designed to incorporate data about
external events, such as new tax laws or
competitors, but they also draw summarized
information from internal MIS and DSS. They

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 Executive support systems
• They filter, compress, and track critical data,
displaying the data of greatest importance to
senior managers.
• Increasingly, such systems include business
intelligence analytics for analyzing trends,
forecasting, and “drilling down” to data at
greater levels of detail.

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 2. Systems for linking the enterprise
• Enterprise applications:
• They span functional areas, focus on executing
business processes across the business firm, and
include all levels of management.
• Enterprise applications help businesses become
more flexible and productive by coordinating
their business processes more closely and
integrating groups of processes so they focus on
efficient management of resources and customer
service.
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 Four major enterprise applications
• “enterprise systems”, “supply chain
management Systems”, “customer
relationship management systems”, and
“knowledge management systems”.
• Each of these enterprise applications
integrates a related set of functions and
business processes to enhance the
performance of the organization as a whole.

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 Enterprise Application Architecture

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 Enterprise systems
• also known as enterprise resource planning (ERP)
systems, to integrate business processes in
manufacturing and production, finance and
accounting, sales and marketing, and human
resources into a single software system.
• Information that was previously fragmented in
many different systems is stored in a single
comprehensive data repository where it can be
used by many different parts of the business.

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 Supply chain systems
• Systems to help manage relationships with their
suppliers.
• They help suppliers, purchasing firms, distributors, and
logistics companies share information about orders,
production, inventory levels, and delivery of products
and services so that they can source, produce, and
deliver goods and services efficiently.
• The ultimate objective is to get the right amount of
their products from their source to their point of
consumption in the least amount of time and at the
lowest cost.

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 Supply chain systems
• They increase firm profitability by lowering
the costs of moving and making products and
by enabling managers to make better
decisions about how to organize and schedule
sourcing, production, and distribution.
• Supply chain management systems are one
type of interorganizational system because
they automate the flow of information across
organizational boundaries.

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Customers relationships management
systems
• They are used to help manage their relationships
with their customers.
• CRM systems provide information to coordinate
all of the business processes that deal with
customers in sales, marketing, and service to
optimize revenue, customer satisfaction, and
customer retention.
• This information helps firms identify, attract, and
retain the most profitable customers; provide
better service to existing customers; and increase
sales.

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 Knowledge management systems
• Some firms perform better than others
because they have better knowledge about
how to create, produce, and deliver products
and services.
• This firm knowledge is unique, difficult to
imitate, and can be leveraged into long-term

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 Knowledge management systems
• Knowledge management systems (KMS) enable
organizations to better manage processes for
capturing and applying knowledge and expertise.
• These systems collect all relevant knowledge and
experience in the firm, and make it available
wherever and whenever it is needed to improve
business processes and management decisions.
They also link the firm to external sources of
knowledge.

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 Intranets and extranets
• Intranets and extranets are alternative tools
for increasing integration and expediting the
flow of information within the firm, and with
customers and suppliers.

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 Extending the value chain: the value
web
• A firm’s value chain is linked to the value chains
of its suppliers, distributors, and customers.
• By working with other firms, industry participants
can use information technology to develop
industry-wide standards for exchanging
information or business transactions
electronically.
• Such efforts increase efficiency, making product
substitution less likely and perhaps raising entry
costs—thus discouraging new entrants.
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 Extending the value chain: the value
web
• A value web is a collection of independent
firms that use information technology to
coordinate their value chains to produce a
product or service for a market collectively.
• It is more customer driven and operates in a
less linear fashion than the traditional value
chain.

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 Global business and system strategies
• There are four main ways of organizing
businesses internationally: domestic exporter,
multinational, franchiser, and transnational, each
with different patterns of organizational structure
or governance.
• In each type of global business organization,
business functions may be centralized (in the
home country), decentralized (to local foreign
units), and coordinated (all units participate as
equals).

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 Global business and system strategies
• The domestic exporter strategy is
characterized by heavy centralization of
corporate activities in the home country of
origin.
• A multinational strategy concentrates
financial management and control out of a
central home base while decentralizing
production, sales, and marketing operations
to units in other countries.

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 Global business and system strategies
• Franchisers have the product created, designed,
financed, and initially produced in the home
country but rely heavily on foreign personnel for
further production, marketing, and human
resources.
• In a transnational strategy, nearly all the value-
adding activities are managed from a global
perspective without reference to national
borders, optimizing sources of supply and
demand wherever they appear and taking
advantage of any local competitive advantages.

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 4 Global system configurations
• Centralized systems are those in which
systems development and operation occur
totally at the domestic home base.
• Duplicated systems are those in which
development occurs at the home base but
operations are handed over to autonomous
units in foreign locations.

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 4 Global system configurations
• Decentralized systems are those in which each
foreign unit designs its own unique solutions
• and systems.
• Networked systems are those in which systems
development and operations occur in an
integrated and coordinated fashion across all
units.

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